Navigating insurance is an important part of healthcare in the United States. Many people choose to enroll in health insurance through their employer, but the system is often difficult to understand.
That’s why we created this infographic to help folks visualize the costs and benefits of their employer-sponsored health insurance. We’ll walk you through why employers choose to offer health insurance coverage as a benefit, how the employee and employer contribute to the cost of insurance, and some of the major differences between the two most common health plans.
Interested in using this as a resource for yourself or your team? Click below to download a printable PDF version to use and share with your employees.
How to Understand Your Employer-Sponsored Health Insurance
Navigating health insurance isn’t always easy, but taking the time to understand your coverage can help you take care of your health and your wallet.
What is employer-sponsored health insurance?
Employer-sponsored health insurance is a benefit that makes healthcare coverage more affordable. Employers may partially or fully cover the cost of insurance premiums, allowing employees to receive medical care at a reduced rate.
Why do employers offer health insurance?
Attract and keep talent: Offering health benefits makes a company more attractive to prospective employees and boosts employee retention.
Promote employee well-being: Providing health insurance demonstrates a commitment to the health, happiness, and material well-being of employees.
Maintain compliance: Employers of a certain size must offer health insurance to full-time employees to avoid penalties.
Do employers have to offer health insurance?
Technically, no. But employers with 50+ full-time employees must provide health insurance to at least 95% of their full-time workforce or pay a hefty fine to the IRS.
The 5 costs that make up a health insurance plan
Premium: The amount you and your employer pay each month for health insurance.
When you pay: Each month, often as an automatic payroll deduction. Your employer likely shares some of this cost with you.
Copay: The discounted price you’ll pay for medications and visits to the doctor.
When you pay: At the time of service.
Deductible: The amount you pay before health insurance starts covering your bills.
When you pay: Whenever you pay costs outside of your copays and premiums.
Co-insurance: The percentage of medical costs you pay after meeting your deductible.
When you pay: After you've reached your deductible and require any other services.
Out-of-pocket maximum: The maximum amount you pay for healthcare each year.
Choosing a health insurance plan
You’ll likely have at least two options for employer-sponsored health insurance: a traditional plan and a high-deductible health plan (HDHP).
Feature
Traditional Plan
High-Deductible Health Plan (HDHP)
Premium
Higher
Lower
Copays
Yes; pay a lower fixed rate for appointments
No; pay more for appointments (insurance discount applies)
Deductible
Lower
Higher
Co-insurance
Yes
No; no costs after meeting your deductible
Out-of-pocket maximum
Yes
Yes; your deductible is your out-of-pocket maximum
Risk level
Low
High
Flexibility
Low
High
HSA-eligible
No
Yes
Can add spouse/family members
Yes
Yes
HSA (Health Savings Account)
A tax-advantaged account used to pay medical expenses. Yours to keep even if you change plans or employers.
What’s covered in your health insurance plan?
In-network providers: Insurance plans have preferred networks of providers. Staying in-network can significantly reduce your healthcare costs.
Prescription drugs: Check your plan's prescription drug tiers (generic, brand-name, specialty drugs) and prior authorization requirements.
Essential Health Benefits: According to the Affordable Care Act, insurance plans must cover:
Outpatient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health/substance disorder services
Prescription drugs
Rehabilitative/habilitative services and devices
Laboratory services
Preventive services/chronic disease management
Pediatric oral and vision care
Your health is irreplaceable, and being informed about insurance is vital to your well-being. Contact your human resources department to learn more about your specific coverage details.
